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[SSI Brief] Russia’s Space Program – Structural Reform: Marketization through Centralization

June 2, 2016


Seonhee Kim

Feature Series

Space Security Initiative Brief

International studies perspectives on space policy of major powers

Crisis and Challenges

In the turmoil of political and economic transition in the early 1990s, Russia’s space program experienced a power vacuum. As a result, regrouping of the sprawling state industry encompassing approximately 300,000 organizations relevant to state space program became inevitable. The necessary regrouping finally became realized in 1992 – the Russian Federal Space Agency, which is now known as Roscosmos was formed with the intent of creating a NASA-like agency capable of managing and developing the space program. At present, Roscosmos is the coordinating hub for space activities in Russia. It performs numerous civilian activities, and coordinates with the Defense Ministry of the Russian Federation for military launches.

Despite initial reforms by Roscosmos, Russia’s space program has faced serious repercussions from the restructuring. Its reputation for operating a reliable fleet of space launch vehicles has been damaged since 2010 due to a significant string of failures. Though the setbacks led to further reorganization of the space program, mishaps continued. One of the major failures was the loss of three Russian GLONASS navigation satellites in December 2010 due to upper stage failure in the process of launching the satellites to the orbit, which reportedly influenced the entire navigational constellation. Russia is still reeling from the fallout of these accidents – it is about to lose its capacity for their satellites’ global coverage, because the life cycles of alternative satellites put into service will soon expire.

The Lack of Innovation

Experts looking to understand the causes of the problems point at how the institutions and companies function. They believe that these companies have merely tried to revamp Soviet era practices rather than undertake proper innovation in the post USSR years. For instance, proposals made for the revamp of the Soyuz rocket (The Soyuz-5) were first introduced in 1966. Experts point at this as evidence of a trend of “endlessly improving and modifying old Soviet space hardware instead of developing radically new technologies.” Russia’s three largest space companies, RSC Energia, the Khrunichev Space Center, and the Progress space center in Samara try to either duplicate one another’s work or prolong the Soviet-era designs in their proposals.

Loss of Social Base for Space Program

In addition to the failure to innovate, a deeper problem lies in the disappearing social base for the development of the space program in Russia. A robust community of Soviet-trained space engineers, scientists, and administrators is now a thing of the past. After the collapse of the Soviet Union in 1991, many Russian space experts emigrated to better-paying jobs in the West. There is today a clear generation gap in the space program as many experts from the former era either left for better-paying space agencies abroad, or stopped working for space program. There is a severe generation gap as young scientists and engineers are not attracted to space development as a career. Falling oil prices and western sanctions have deprived the Russian space industry of the resources that traditionally provided the brightest brains with incentives and special privileges to remain in Russia. In 2012, for example, a Russian cosmonaut made $26,000 a year, while one at NASA made between $63,000 and $139,000.

Structural Reform – Marketization through Centralization

Faced with the rising cost of launching satellites and the failure to launch the new launch vehicle Proton rocket in July 2013, Russia has begun renationalizing its space sector. Auditing the space agencies and transforming them into a state-run corporation has already started. This is expected to help centralize diversified capacities in the Russian space industry and help attract foreign and private investments. As of July 2015, Russia’s new state space corporation, called Roscosmos, is mandated to replace numerous individual agencies in Russia’s space industry. With foreign policy and domestic economy not ideally placed to attract global capital and talent at the moment, Roscosmos hopes to modernize the Russian space program through a focus on technology and productivity.

This publication was made possible in part by a grant from Carnegie Corporation of New York. The statements made and views expressed are solely the responsibility of the author.